Gold snaps back on risk-on start to Asia
|- Gold drops back below February high at 1347.11.
- A positive outcome to the U.S. / Mexican talks.
Following last week's price action surrounding the nonfarm payrolls miss, gold prices have been dented at the start of trade this week with a positive outcome to the U.S. / Mexican talks.
Late on Friday, Trump Tweeted,
"... the tariffs scheduled to be implemented by the U.S. on Monday against Mexico are hereby indefinitely suspended - Mexico has agreed to take strong measures to stem the tide of Migration through Mexico ... details of the agreement will be released shortly by the State Department"...
Friday's joint communique broadly sketched the terms of the agreement but it contained few details. Meanwhile, there has been little in the way of progress on The Chinese US trade war front following the weekend's G20.
The G20 of finance leaders met and it has been noted that geopolitical tensions have “intensified”, which are raising risks to improve global growth. However, there were no precise comments related specifically to U.S.-China trade conflict. U.S. Treasury Secretary Steven Mnuchin did meet with People’s Bank of China (PBOC) Governor Yi Gang in the first meeting of high-level U.S. officials in a month. Mnuchin described the meeting as “constructive” and “a candid discussion on trade issues”, although we have not had any further details from it than that. Mnuchin said that U.S. President Donald Trump and Chinese President Xi Jinping would meet at a June 28-29 G20 summit in Osaka, but the meeting has not been confirmed by China.
Gold levels
Bulls have shied away from a run towards the 1357.66 levels, as being the is the 2014-2019 resistance line.1392.55 is the 2014 high. A correction back to 1325, 1311 and 1303/06 areas could be on the cards, albeit leaving the metal in bearish territory above prior trendline resistance. On the downside, 1297 is likely to be a line in the sand being the 50% Fibo retracement of the late April and early May double-bottom swing lows to recent spike high. The 55-week ma sits at around 1260s and the 200-week ma comes in at 1250s.
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